Grandpa told me the story of the biggest mistake in his life every year until the day he died and he always ended the story with the same advice: Never ignore the local marketplace. Grandpa didn’t research the local real estate market. He made his decision about purchasing the skyscraper his business was located in based on what he read in the newspapers and heard on the radio: Across the nation jobs were scarce and families were struggling to make ends meet. He relied on national trends as well as on his experience of what was happening to those closest to him up in the Bronx where he lived – businesses along the Grand Concourse struggling to survive… Grandpa allowed the ills of the nation and the neighborhood where he lived -- which he read and heard about every day -- to blind him to the activity and prospects of the local marketplace in which his business was located. He had an opportunity to purchase a fifty-story building on one of the most sought-after retail streets in the world for a deep discount, and he missed it. He ignored the rich potential of Manhattan because he was so focused on the nation and the Bronx. He ignored the gravity and pull of Manhattan because of the dismal stories he heard about Newark, New Jersey and Philadelphia. He learned the hard way that local real estate values are determined by local activity. He had made a mistake that he would not let himself, or me, ever forget.
In this book, I am following Grandpa’s lead. My objective is to offer you some valuable lessons on purchasing real estate. My Grandfather was not the only person to make a mistake in real estate. Mistakes are made by many households and investors every year. The common thread among them— they did not pay attention to local influences and activity.
I believe that if you master the lessons that I have learned over the years on how to evaluate and purchase real estate the local way—you will become a successful real estate investor—and make Grandpa proud.
—From ALL REAL ESTATE IS LOCAL
Whatever the national trends are with regard to real estate – whether they are booming or busting – what really matters is what the market conditions are in your region, town, or neighborhood. For as David Lereah points out, in the end, all real estate is local.
What does that mean? Even during the real estate boom of 2001-2005, a great many cities and regions did not participate in the boom – they lagged behind, or even decreased in value. Similarly, when prices began to fall nationally, there were plenty of regions and locales where prices rose, and sales boomed. As Lereah makes clear, the most important factor in buying or selling a home isn’t what is going on nationally – it is what is going on in your local market. Evaluating present and future trends and influences in your region or neighborhood is essential to creating long term wealth, whether you are in a buyer’s or a seller’s market. And David Lereah, as the Chief Economist for the National Association of Realtors, shows you how to determine the conditions in your neighborhood. Lereah reveals how to:
Evaluate the DNA of homes in the town or county or region you are considering (every town has its own real estate DNA – the characteristics that make a region or city more or less desirable to live in).
Determine whether property values in your targeted neighborhood are on the rise.
Research future real estate influences and trends, from migration into or out of the region, to plans to attract or develop new businesses in the area.
Understand the local factors that can affect your investment in the future.
Countless books offer advice on how to buy and sell a home. But ALL REAL ESTATE IS LOCAL is the first book to explain how knowing the ins and outs of the local market you are targeting is essential to deciding when, where, and what to buy.
DAVID LEREAH is Senior Vice President and Chief Economist of the National Association of Realtors. His economic and real estate market commentary is regularly quoted in the Wall Street Journal, the New York Times, BusinessWeek, and on CNN Business News, CNBC, and other media. He lives in Fairfax Station, Virginia.
